ABDULLA MOHAMED YUSUF PATEL ,MUMBAI vs. ASSISTANT COMMISSIONER OF INCOME TAX 20(1), MUMBAI

Abdulla Mohamed Yusuf Patel 3 & 3133/MUM/2024 & 3133/MUM/2024

“8. Grounds No. 3 and 4 of appeal relate to the appellant's contenti Grounds No. 3 and 4 of appeal relate to the appellant's contentions Grounds No. 3 and 4 of appeal relate to the appellant's contenti against determination of total income at Rs. 1,18,75,195/ against determination of total income at Rs. 1,18,75,195/ against determination of total income at Rs. 1,18,75,195/- as against the returned income of Rs.62,63,110/ the returned income of Rs.62,63,110/-. The appellant has challenged . The appellant has challenged the addition of Rs.53,94,608/ the addition of Rs.53,94,608/- as unexplained credits under section 68 as unexplained credits under section 68 of the Act on account of cash deposit in Ba of the Act on account of cash deposit in Bank account during the year. nk account during the year. These grounds of appeal are taken up together for adjudication for the These grounds of appeal are taken up together for adjudication for the These grounds of appeal are taken up together for adjudication for the sake of clarity and brevity. Credible information was received from the sake of clarity and brevity. Credible information was received from the sake of clarity and brevity. Credible information was received from the Investigation Wing regarding cash deposits having been made by the Investigation Wing regarding cash deposits having been made by the Investigation Wing regarding cash deposits having been made by the appellant in his b appellant in his bank accounts during the year. As seen from the ank accounts during the year. As seen from the assessment order the appellant was asked to explain the source of cash assessment order the appellant was asked to explain the source of cash assessment order the appellant was asked to explain the source of cash deposits amounting to Rs.85.97 lakhs during the year in his HDFC deposits amounting to Rs.85.97 lakhs during the year in his HDFC deposits amounting to Rs.85.97 lakhs during the year in his HDFC bank accounts. He submitted that these deposits were made out of bank accounts. He submitted that these deposits were made out of bank accounts. He submitted that these deposits were made out of withdrawals of cash from his own accounts. However the AO did not als of cash from his own accounts. However the AO did not als of cash from his own accounts. However the AO did not find the explanation of the appellant to be satisfactory on various find the explanation of the appellant to be satisfactory on various find the explanation of the appellant to be satisfactory on various grounds, such as, what was the rationale and intention for grounds, such as, what was the rationale and intention for grounds, such as, what was the rationale and intention for withdrawing cash regularly from bank accounts and re withdrawing cash regularly from bank accounts and re-depositing the depositing the same despite having sufficient cash balances available; the appellant's e despite having sufficient cash balances available; the appellant's e despite having sufficient cash balances available; the appellant's line of business did not require such frequent cash withdrawals. During line of business did not require such frequent cash withdrawals. During line of business did not require such frequent cash withdrawals. During appellate proceedings, the appellant repeated the same explanation appellate proceedings, the appellant repeated the same explanation appellate proceedings, the appellant repeated the same explanation regarding source of cash deposits being from wit regarding source of cash deposits being from withdrawals from his own hdrawals from his own accounts. As regards the rationale for the same, he stated certain accounts. As regards the rationale for the same, he stated certain accounts. As regards the rationale for the same, he stated certain personal reasons relating to familial dispute for the same which had personal reasons relating to familial dispute for the same which had personal reasons relating to familial dispute for the same which had also been raised before the AO. also been raised before the AO. However, the appellant's explanation is However, the appellant's explanation is not found to be satisfacto not found to be satisfactory or sufficient to establish the source and ry or sufficient to establish the source and nature of the cash deposits made by him. In the assessment order the nature of the cash deposits made by him. In the assessment order the nature of the cash deposits made by him. In the assessment order the AO examined the cash book produced by the appellant showing daily AO examined the cash book produced by the appellant showing daily AO examined the cash book produced by the appellant showing daily cash balances and found that there was maximum cash balance of cash balances and found that there was maximum cash balance of cash balances and found that there was maximum cash balance of Rs.53,94,608/- - on 04.01.2011. Considering that whatever income 04.01.2011. Considering that whatever income appellant would have earned was being ploughed back into the appellant would have earned was being ploughed back into the appellant would have earned was being ploughed back into the appellant's business and the appellant would have, at most, earned appellant's business and the appellant would have, at most, earned appellant's business and the appellant would have, at most, earned income to the extent of the maximum cash balance as per his cash book, income to the extent of the maximum cash balance as per his cash book, income to the extent of the maximum cash balance as per his cash book, the AO treated this maximum cash balance to be unexplained cash treated this maximum cash balance to be unexplained cash treated this maximum cash balance to be unexplained cash credit under section 68 of the Act and added it to the total income of the credit under section 68 of the Act and added it to the total income of the credit under section 68 of the Act and added it to the total income of the appellant for the year. As mentioned earlier, during appellate appellant for the year. As mentioned earlier, during appellate appellant for the year. As mentioned earlier, during appellate proceedings also, the appellant failed to substantiate the na proceedings also, the appellant failed to substantiate the na proceedings also, the appellant failed to substantiate the nature and source of the cash deposits made by him as per his contention raised in source of the cash deposits made by him as per his contention raised in source of the cash deposits made by him as per his contention raised in the grounds of appeal. He thus failed to discharge the onus cast upon the grounds of appeal. He thus failed to discharge the onus cast upon the grounds of appeal. He thus failed to discharge the onus cast upon him. The fact is that money has no colour and merely making a claim him. The fact is that money has no colour and merely making a claim him. The fact is that money has no colour and merely making a claim without any corroborative documentary without any corroborative documentary evidence to substantiate the evidence to substantiate the same does not help the case. In view of the factual matrix of the case, I same does not help the case. In view of the factual matrix of the case, I same does not help the case. In view of the factual matrix of the case, I find no infirmity in the addition made find no infirmity in the addition made by the AO in this regard. It may by the AO in this regard. It may be pertinent to mention here (as referred to earlier in this order) that be pertinent to mention here (as referred to earlier in this order) that be pertinent to mention here (as referred to earlier in this order) that vide subsequent rectification order under section 154 of the act dated bsequent rectification order under section 154 of the act dated bsequent rectification order under section 154 of the act dated 18/03/2023 the total income of the appellant for the year was rectified 18/03/2023 the total income of the appellant for the year was rectified 18/03/2023 the total income of the appellant for the year was rectified to Rs. 1,24,71,710/ to Rs. 1,24,71,710/- instead of Rs. 1,18,75, 195/-.

Abdulla Mohamed Yusuf Patel 5 & 3133/MUM/2024 & 3133/MUM/2024

8.1 In CIT V. P. Mohankala [2007] 291 ITR 278 (SC) the Hon'ble Apex 8.1 In CIT V. P. Mohankala [2007] 291 ITR 278 (SC) the Hon'ble Apex 8.1 In CIT V. P. Mohankala [2007] 291 ITR 278 (SC) the Hon'ble Apex Court held that Court held that - A bare reading of section 68 of the Income A bare reading of section 68 of the Income- tax Act, 1961, suggests that i) there has to be credit of amounts in the books 1961, suggests that i) there has to be credit of amounts in the books 1961, suggests that i) there has to be credit of amounts in the books maintained by the assessee; (ii) such credit has to be a sum of money maintained by the assessee; (ii) such credit has to be a sum of money maintained by the assessee; (ii) such credit has to be a sum of money during the previous year; and (ili) either (a during the previous year; and (ili) either (a) the assessee offers no ) the assessee offers no explanation about the nature and source of such credits found in the explanation about the nature and source of such credits found in the explanation about the nature and source of such credits found in the books or (b) the explanation offered by the assessee, in the opinion of books or (b) the explanation offered by the assessee, in the opinion of books or (b) the explanation offered by the assessee, in the opinion of the Assessing Officer, is not satisfactory. It is only then that the sum so the Assessing Officer, is not satisfactory. It is only then that the sum so the Assessing Officer, is not satisfactory. It is only then that the sum so credited may b credited may be charged to Income-tax as the income of the assessee of income of the assessee of that previous year. The expression "the assessee offers no explanation" that previous year. The expression "the assessee offers no explanation" that previous year. The expression "the assessee offers no explanation" means the assessee offers no proper, reasonable and acceptable means the assessee offers no proper, reasonable and acceptable means the assessee offers no proper, reasonable and acceptable explanation as regards the sums found credited in the books explanation as regards the sums found credited in the books explanation as regards the sums found credited in the books maintained by the assessee. tained by the assessee. 8.2 In A. Govindarajulu In A. Govindarajulu Mudaliar. [1958] 34 ITR 807 (SC) the Hon'ble 34 ITR 807 (SC) the Hon'ble Supreme Court held that Section 68 casts liability on assesse Supreme Court held that Section 68 casts liability on assesse Supreme Court held that Section 68 casts liability on assesse - the assessee has to prove assessee has to prove satisfactorily the source and nature of certain satisfactorily the source and nature of certain amounts of cash received amounts of cash received during the accounting year and if not, the ITO accounting year and if not, the ITO is entitled to draw the inference that the receipts are of an assessable is entitled to draw the inference that the receipts are of an assessable is entitled to draw the inference that the receipts are of an assessable nature. 8.3 In the case of Income tax Officer v. Solid Machinery Co. (P.) In the case of Income tax Officer v. Solid Machinery Co. (P.) In the case of Income tax Officer v. Solid Machinery Co. (P.) Ltd.[2022] 143 taxmann.com 143 taxmann.com 293 (Mumbai - Trib.), the Hon'ble Trib.), the Hon'ble ITAT while deciding in while deciding in favour of Revenue, placed reliance on the Hon'ble favour of Revenue, placed reliance on the Hon'ble Supreme Court's observation in the case of 'CIT v. Durga Prasad More Supreme Court's observation in the case of 'CIT v. Durga Prasad More Supreme Court's observation in the case of 'CIT v. Durga Prasad More [1971] 82 ITR 540, to the effect that "Science has not yet invented any [1971] 82 ITR 540, to the effect that "Science has not yet invented any [1971] 82 ITR 540, to the effect that "Science has not yet invented any instrument to test the reliability of the instrument to test the reliability of the evidence placed before a court or evidence placed before a court or tribunal. Therefore, the courts and Tribunals have to judge the evidence tribunal. Therefore, the courts and Tribunals have to judge the evidence tribunal. Therefore, the courts and Tribunals have to judge the evidence before them by applying the test of human probabilities". Similarly, in a before them by applying the test of human probabilities". Similarly, in a before them by applying the test of human probabilities". Similarly, in a later decision in the case of Sumati Dayal v. CIT [1995] 80 Taxman later decision in the case of Sumati Dayal v. CIT [1995] 80 Taxman later decision in the case of Sumati Dayal v. CIT [1995] 80 Taxman 89/214 ITR 801 (SC), Hon'ble Supreme Court rejected the theory that it TR 801 (SC), Hon'ble Supreme Court rejected the theory that it TR 801 (SC), Hon'ble Supreme Court rejected the theory that it is for alleger to prove that the apparent and not real, and observed that, is for alleger to prove that the apparent and not real, and observed that, is for alleger to prove that the apparent and not real, and observed that, "This, in our opinion, is a superficial approach to the problem. The "This, in our opinion, is a superficial approach to the problem. The "This, in our opinion, is a superficial approach to the problem. The matter has to be considered in the light of human matter has to be considered in the light of human probabilities... probabilities... Similarly the observation.... that if it is alleged that these tickets were Similarly the observation.... that if it is alleged that these tickets were Similarly the observation.... that if it is alleged that these tickets were obtained through fraudulent means, it is upon the alleger to prove that it obtained through fraudulent means, it is upon the alleger to prove that it obtained through fraudulent means, it is upon the alleger to prove that it is so, ignores the reality. The transaction about purchase of winning is so, ignores the reality. The transaction about purchase of winning is so, ignores the reality. The transaction about purchase of winning ticket takes plac ticket takes place in secret and direct evidence about such purchase e in secret and direct evidence about such purchase would be rarely available In our opinion, the majority opinion after would be rarely available In our opinion, the majority opinion after would be rarely available In our opinion, the majority opinion after considering surrounding circumstances and applying the test of human considering surrounding circumstances and applying the test of human considering surrounding circumstances and applying the test of human probabilities has rightly concluded that the appellant's claim abo probabilities has rightly concluded that the appellant's claim abo probabilities has rightly concluded that the appellant's claim about the amount being her winning from races is not genuine. It cannot be said amount being her winning from races is not genuine. It cannot be said amount being her winning from races is not genuine. It cannot be said that the explanation offered by the appellant in respect of the that the explanation offered by the appellant in respect of the that the explanation offered by the appellant in respect of the said amounts has been rejected unreasonably". We will be superficial in our amounts has been rejected unreasonably". We will be superficial in our amounts has been rejected unreasonably". We will be superficial in our approach in case we examine the claim o approach in case we examine the claim of the assessee solely on the f the assessee solely on the basis of documents filed by the basis of documents filed by the assessee and overlook clear the assessee and overlook clear the unusual pattern in the documents filed by the assessee and unusual pattern in the documents filed by the assessee and unusual pattern in the documents filed by the assessee and pretend to be oblivious of the ground realities. As Hon'ble Supreme Court has be oblivious of the ground realities. As Hon'ble Supreme Court has be oblivious of the ground realities. As Hon'ble Supreme Court has observed, in the case of D observed, in the case of Durga Prasad More (supra),........."it is true that urga Prasad More (supra),........."it is true that an apparent must be considered real until it is shown that there are an apparent must be considered real until it is shown that there are an apparent must be considered real until it is shown that there are reasons to believe that the apparent is not the real party who relies on a reasons to believe that the apparent is not the real party who relies on a reasons to believe that the apparent is not the real party who relies on a recital in a deed has to establish the truth of those recital recital in a deed has to establish the truth of those recitals, otherwise it s, otherwise it

Abdulla Mohamed Yusuf Patel 6 & 3133/MUM/2024 & 3133/MUM/2024 will be very easy to make self will be very easy to make self-serving statements in documents either serving statements in documents either executed or taken by a party and rely on those recitals. If all that an executed or taken by a party and rely on those recitals. If all that an executed or taken by a party and rely on those recitals. If all that an assessee who wants to evade tax is to have some recitals made in a assessee who wants to evade tax is to have some recitals made in a assessee who wants to evade tax is to have some recitals made in a document either executed by him document either executed by him or executed in his favour then the door or executed in his favour then the door will be left wide open to evade tax. A little probing was sufficient in the will be left wide open to evade tax. A little probing was sufficient in the will be left wide open to evade tax. A little probing was sufficient in the present case to show that the apparent was not the real. The taxing present case to show that the apparent was not the real. The taxing present case to show that the apparent was not the real. The taxing authorities were not required to put on blinkers while looking at the authorities were not required to put on blinkers while looking at the authorities were not required to put on blinkers while looking at the documents produced before them. They were entitled to look into the ocuments produced before them. They were entitled to look into the ocuments produced before them. They were entitled to look into the surrounding circumstances to find out the reality of the recitals made in surrounding circumstances to find out the reality of the recitals made in surrounding circumstances to find out the reality of the recitals made in those documents". those documents". 8.4 In Sreelekha Banerjee V. CIT In Sreelekha Banerjee V. CIT -[1963] 49 ITR 112 (SC), the Hon'ble [1963] 49 ITR 112 (SC), the Hon'ble Supreme Court held that it Supreme Court held that it is the assessee that has to prove that an is the assessee that has to prove that an entry in the books of accounts does not bear the character of income. At entry in the books of accounts does not bear the character of income. At entry in the books of accounts does not bear the character of income. At that stage the Department is required to prove nothing. that stage the Department is required to prove nothing. 8.5 It was also seen that the appellant had shown income on account of It was also seen that the appellant had shown income on account of It was also seen that the appellant had shown income on account of rent received from various telecom tower operators under the head from various telecom tower operators under the head from various telecom tower operators under the head income from business and profession and income from other sources income from business and profession and income from other sources income from business and profession and income from other sources instead of income from house property, and claimed deduction of instead of income from house property, and claimed deduction of instead of income from house property, and claimed deduction of expenses there in. On being asked during assessment proceedings why expenses there in. On being asked during assessment proceedings why expenses there in. On being asked during assessment proceedings why the same should not be disallowed, the appellant responded by saying me should not be disallowed, the appellant responded by saying me should not be disallowed, the appellant responded by saying that he had done the accounting as per the advice of his CA. that he had done the accounting as per the advice of his CA. that he had done the accounting as per the advice of his CA. The AO thus treated Rs. 4,59,246/ thus treated Rs. 4,59,246/- rental income as income from house rental income as income from house property and disallowed expenses claimed at Rs. 11,56,714/ property and disallowed expenses claimed at Rs. 11,56,714/ property and disallowed expenses claimed at Rs. 11,56,714/- under section 37 of the Act. section 37 of the Act. During appellate proceedings the appellant has During appellate proceedings the appellant has not made any submission on this matter. I do not find any infirmity in not made any submission on this matter. I do not find any infirmity in not made any submission on this matter. I do not find any infirmity in the action of the AO in treating the income under the correct head and the action of the AO in treating the income under the correct head and the action of the AO in treating the income under the correct head and disallowing the expenses claimed. These disallowing the expenses claimed. These grounds of appeal are grounds of appeal are therefore found untenable and dismissed. therefore found untenable and dismissed.”

5. Before us, on behalf of the assessee, the Ld. counsel did not Before us, on behalf of the assessee, the Ld. counsel did not Before us, on behalf of the assessee, the Ld. counsel did not pressed ground No. 1 and 2 of the appeal challenging the validity of pressed ground No. 1 and 2 of the appeal challenging the validity of pressed ground No. 1 and 2 of the appeal challenging the validity of the reassessment. The ground No the reassessment. The ground Nos. 3 and 4 are in relation . 3 and 4 are in relation to merit of the addition of Rs.53,94,608/ of the addition of Rs.53,94,608/-. The Ld. counsel for the assessee . The Ld. counsel for the assessee referred to the Paper Book page 37 which is cash book or cash flow referred to the Paper Book page 37 which is cash book or cash flow referred to the Paper Book page 37 which is cash book or cash flow statement for the year under consideration indicating withdrawal of statement for the year under consideration indicating withdrawal of statement for the year under consideration indicating withdrawal of the money from the bank accounts as well as the money from the bank accounts as well as re- -deposit in said bank accounts. He also referred to detailed bank statement also referred to detailed bank statement, available from pages 12 to 35 of the Paper Book. The Ld. counsel for 12 to 35 of the Paper Book. The Ld. counsel for the assessee accordingly submitted that source of the cash the assessee accordingly submitted that source of the cash the assessee accordingly submitted that source of the cash

Abdulla Mohamed Yusuf Patel 7 & 3133/MUM/2024 & 3133/MUM/2024 deposited has been duly explained by the withdrawal from bank deposited has been duly explained by the withdraw deposited has been duly explained by the withdraw account by the assessee. He submitted that Assessing Officer the assessee. He submitted that Assessing Officer the assessee. He submitted that Assessing Officer has merely presumed that money that money withdrawn was invested invested somewhere else without no documentary evidence in support of presumption no documentary evidence in support of presumption no documentary evidence in support of presumption

Abdulla Mohamed Yusuf Patel 8 & 3133/MUM/2024 & 3133/MUM/2024 has not been able to substantiate whether the assessee has has not been able to substantiate whether the assessee has has not been able to substantiate whether the assessee has invested the cash withdrawn the cash withdrawn somewhere else or utilized the money somewhere else or utilized the money for household expenses for household expenses. In absence of any such documentary . In absence of any such documentary evidences, it cannot be presumed that said cash was not avail it cannot be presumed that said cash was not avail it cannot be presumed that said cash was not available with the assessee for re with the assessee for re-deposit. In view of the deposit. In view of the facts and circumstances explained by the Ld. counsel for the assessee, we circumstances explained by the Ld. counsel for the assessee circumstances explained by the Ld. counsel for the assessee reject the contention of the Ld. DR for considering surrounding reject the contention of the Ld. DR for considering surrounding reject the contention of the Ld. DR for considering surrounding circumstances while deciding the issue of source of cash deposits. circumstances while deciding the issue of source of cash deposit circumstances while deciding the issue of source of cash deposit In view of the above discussion, the finding of the Ld. CIT(A) on the In view of the above discussion, the finding of the Ld. CIT(A) on the In view of the above discussion, the finding of the Ld. CIT(A) on the issue in dispute is set aside and the addition of cash deposit of issue in dispute is set aside and the addition of cash deposit of issue in dispute is set aside and the addition of cash deposit of Rs.53,94,608/- treated as unexplained cash treated as unexplained cash credit credit is deleted. The ground Nos. 3 and 4 of the appeal are accordingly a . 3 and 4 of the appeal are accordingly allowed. The . 3 and 4 of the appeal are accordingly a ground No. 5 of the appeal relates to initi ground No. 5 of the appeal relates to initiating of the penalty proceedings which is premature at this stage and proceedings which is premature at this stage and therefore therefore same is dismissed as infructuous. The gro dismissed as infructuous. The ground No. 6 of the appeal relates und No. 6 of the appeal relates to charging of interest u/s 234B and 234C of the Act, which is charging of interest u/s 234B and 234C of the charging of interest u/s 234B and 234C of the consequential in nature in nature and the therefore, same is dismissed as and the therefore, same is dismissed as infructuous. The ground No. 7 of the appeal is infructuous. The ground No. 7 of the appeal is general in nature general in nature and same is dismissed as infructuous. and same is dismissed as infructuous. for AY 2012 3133/Mum/2024 for AY 2012-13

Abdulla Mohamed Yusuf Patel 9 & 3133/MUM/2024 & 3133/MUM/2024 statement available on Paper Book page 47. In the year under on Paper Book page 47. In the year under consideration also the assessee has explained the source of the consideration also the assessee has explained the source of the consideration also the assessee has explained the source of the cash deposits as out from the withdrawal cash deposits as out from the withdrawals appearing in appearing in bank statement. As the facts and circumstances in the year under the facts and circumstances in the year under the facts and circumstances in the year under consideration being identical to facts and circumstances in nsideration being identical to facts and circumstances in nsideration being identical to facts and circumstances in assessment year 2011 assessment year 2011-12, therefore, following our fin therefore, following our finding in assessment year 2011 assessment year 2011-2, the findings of the Ld. CIT(A) on the issue of the Ld. CIT(A) on the issue in dispute in the year under consideration in dispute in the year under consideration are set aside and the set aside and the addition made of Rs.38,60,323/ tion made of Rs.38,60,323/- is deleted. The grounds raised by is deleted. The grounds raised by the assessee are accordingly adjudicated mutatis mutandis to the assessee are accordingly adjudicated mutatis mutandis to the assessee are accordingly adjudicated mutatis mutandis to assessment year 2011 assessment year 2011-12.